Companies are to be given greater freedom to sack under-performing workers as
part of an overhaul of employment laws to boost the economic recovery.

The new “employers’ charter” will allow companies to sack workers during the first two years of their employment without the threat of being taken to a tribunal for unfair dismissal.

Currently an employee can bring an unfair dismissal claim after only a year.

To reduce the number of vexatious allegations, workers will face a fee when lodging an employment tribunal claim.

The Daily Telegraph can disclose that the Government is also launching a review that is likely to see small companies excluded from some stringent employment laws. The length of time that firms have to pay workers statutory sick pay is set to be reduced as part of the shake-up.

David Cameron hopes that relaxed employment laws will help to boost the private sector and encourage firms to take on thousands of new workers.

Related Articles

Downing Street will host a jobs summit on Monday at which some of the biggest employers – including Tesco, McDonalds, Microsoft and Shell — will promise to take on thousands of recruits and create apprenticeships for school leavers.

The issue of jobs is likely to dominate the first day of the new parliamentary session as MPs return after the holiday recess.

The Coalition will try to focus on its plans for economic growth, rather than public spending cuts.

Mr Cameron said: “We can only get our economy back on track by creating a climate in which the private sector can grow and develop, creating jobs and opportunities for people across the country. This year the Government is determined to help deliver many thousands of new jobs and I’m delighted that the companies joining me today are part of that.

“Across a whole range of areas you’re going to see the most pro-business, pro-growth, pro-jobs agenda ever unleashed by a government.

“It’s time we looked forward to a positive, strong, confident Britain. By developing the right skills and jobs I am determined that the many, not the few will share in the country’s prosperity.”

In total 19 major employers will attend today’s summit with other firms including Balfour Beatty, Centrica, Jaguar, Land Rover and Marks and Spencer.

Downing Street said the Prime Minister would talk to employers about “what more the Government can do to enable employers to get Britain working again”.

Currently workers can pursue a claim for unfair dismissal after a year of full-time employment.

This is expected to be increased to two years, a move that does not require new legislation.

A similar rise was introduced in the 1980s, leading to an increase in employment. The one-year limit was proposed in 1996 and enacted by the Labour government.

Claims for discrimination can be lodged after any term of employment.

Companies also have to pay statutory sick pay of at least £79.15 for up to 28 weeks to those unable to work. The period of payment by employers may be reduced in future.

Mr Cameron is expected to order a wider review of employment laws to slash the red tape for smaller companies.

These firms are seen as the key to securing the economic recovery and encouraging the next generation of entrepreneurs.

Many small and medium-sized firms complain that they are being hindered by employment rules introduced over the past decade.

Ministers are expected to contrast the “employers’ charter” with the European-led social charter introduced by Labour which boosted workers’ rights.

A Whitehall source said: "The thrust of the initiative is that to persuade companies to hire people we need to make it easier to fire those workers who aren't up to the job, so there is less risk in taking on new people, especially the young.” The plan, which will be officially announced after the Oldham and Saddleworth by-election on Thursday, is expected to be fiercely opposed by the trade unions.

Workers’ leaders have warned of the consequences of encouraging “second rate employers” by weakening labour laws.

The TUC is planning mass protests against Government cuts in the spring and the “employers’ charter” could further antagonise the unions.

Mr Cameron said yesterday that he would not be “pushed around” by the unions.

“Striking is not going to achieve anything,” he said. “The trade unions need to know they’re not going to be able to push anyone around by holding this strike, or that strike or even a whole lot of strikes together.

“This Government is a very strong government. It’s got a strong majority. I believe the public is right behind the approach that we are taking and people need to know we will not change course because one union or another union wants to kick off.”

Ed Miliband, the Labour leader, will join the debate on jobs today, by holding a press conference to attack the Government’s approach to tackling youth unemployment. Mr Miliband is expected to say: “The first thing Mr Cameron should be addressing at his meeting today is the risk of a lost generation of young people in this country.

“He should follow Labour’s advice and keep the Future Jobs Fund which would mean 100,000 extra jobs for young people. There will be a looming gap in the help given to unemployed young people.This decision to betray young people is not just unfair it is the wrong long-term economic judgment for our country.”

The Government’s employment policies were also criticised by the shadow minister for equality and women.

Yvette Cooper pointed out that women were likely to be hardest hit by the proposals because they were often in shorter term employment.

“The Government is already hitting women hardest in their pockets through cuts in child benefit and child tax credit,” she said. “Now these plans look likely to hit hardest at women’s jobs, because women are more likely to be in shorter term work.

“It is typical of this deeply unfair government to claim the only way to bring unemployment down is to make it easier to sack people who have been doing jobs between one and two years.”